The tech-heavy Nasdaq Composite is down almost 25% from its peak, as macroeconomic uncertainty has caused investors to reevaluate their exposure to risky assets. Not surprisingly, many individual growth stocks have fallen much further. For instance, Global-e Online (GLBE 11.31%) and Etsy (ETSY 7.84%) are down about 77% and 73%, respectively.

However, the primary headwinds behind that price action are high inflation and rising interest rates, and those are temporary situations. More importantly, every past market downturn has been a buying opportunity, and there is no reason to believe this one is any different. With that in mind, Global-e and Etsy look like smart long-term investments.

Here’s why.

A stressed-looking investor stands by a large window and pinches their brow.

Image source: Getty Images.

1. Global-e Online

The internet has made geographic borders less important in retail, allowing businesses to reach buyers around the world with a few clicks. However, cross-border commerce is much more complicated than domestic commerce. Merchants must support different languages and currencies, and they must address regulatory issues in foreign markets. That’s where Global-e Online can help.

Global-e simplifies cross-border commerce by optimizing a merchant’s online storefront for international buyers, localizing details like the language, currency, and payment options on a market-by-market basis. The company also handles the calculation and remittance of import duties and foreign taxes, and it provides fulfillment services to simplify logistics. Collectively, those products boost international conversion rates, often by more than 60%.

That value proposition has translated into solid financial results, especially on the top line. Revenue climbed 69% to $275 million over the past year, and while Global-e is still unprofitable on a GAAP (generally accepted accounting principles) basis, the company generated $22 million in free cash flow. That means its operations are producing sufficient capital to grow the business.

Looking ahead, the network effect that powers Global-e should continue to drive growth. Specifically, its platform facilitates commerce across 200 destination markets, and each transaction generates more consumer data. Using that information, Global-e leans on artificial intelligence to surface insights and boost conversion rates for its merchants. That should make its platform more effective over time.

Additionally, Global-e recently announced a $500 million deal to acquire Flow Commerce, a company that specializes in cross-border retail solutions for small businesses. That deal should help Global-e bring more emerging brands onto its platform. Finally, Forrester Research values the global e-commerce market at $736 billion by 2023. That puts Global-e in front of a massive opportunity, and it leaves significant upside for shareholders.

2. Etsy

Etsy has become a major player in the e-commerce industry. It ranks as the fourth-most-popular online marketplace in the United States and the sixth-most-popular worldwide, according to Similarweb. The secret behind Etsy’s success is its ecosystem of 5.5 million active sellers that supply the platform with all manner of handcrafted and custom products, from home furnishings and jewelry to apparel and cosmetics.

On that note, Etsy has built its business around small merchants. The company offers tools for payment processing, advertising, and shipping, and it provides an extensive library of educational content, all of which simplify commerce. In turn, Etsy’s thriving network of sellers has helped it earn a reputation for unique and specialized goods — the kind of products you won’t find anywhere else — and that has attracted 89 million active buyers.

Despite a tough macroeconomic environment, Etsy delivered respectable financial results over the past year. Revenue climbed 15% to $2.4 billion, and the company generated $529 million in free cash flow. More importantly, investors have good reason to believe Etsy can maintain or even accelerate its growth in the coming years.

Currently, management puts its addressable market at $466 billion, but that figure doesn’t account for its recent acquisitions. In 2021, Etsy expanded its presence in the apparel vertical with its buyout of fashion resale marketplace Depop, a platform that is particularly popular with Gen Z consumers. The company also expanded its geographic footprint in Latin America with its acquisition of Elo7, a Brazilian marketplace that (like Etsy) specializes in handcrafted goods.

More broadly, Etsy should benefit from the continued adoption of online shopping, and over time, the network effect that powers its business should bring more buyers and sellers to its marketplace, enhancing its already-differentiated inventory. With that mind, shares currently trade at 5.1 times sales — significantly cheaper than their five-year average of 10.5 times sales — so now looks like a great time to buy this growth stock.


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